Let’s say you’re sitting at your desk Monday morning, your
telephone rings, and it’s Jane, opposing counsel in one of your cases,
calling to see if you might be interested in discussing the offer she
e-mailed you last week. Because you’re mostly up-to-speed on it, you
jump right in.

What just happened? You — like thousands of lawyers in
countless negotiations every day — just made a common negotiation mistake
even the most experienced lawyers consistently make. Who has the advantage
here? Jane. Why? You agreed to speak with Jane before you had strategically
prepared.

Here’s what you should have said: "I’m right in the
middle of something. Can I get back with you shortly?" Then you
should have strategically prepared.

The fact is, lawyers negotiate constantly. Whether you’re
trying to settle a lawsuit or attempting to close a merger, you’re negotiating.
Yet relatively few lawyers have ever learned the strategies and techniques
of effective negotiation. Instead, most lawyers negotiate instinctively
or intuitively. It’s natural. It can also be devastating.

To avoid this mistake and others — and to strategically
negotiate and thus increase your ability to get what you and your clients
want, follow my Five Golden Rules of Negotiation.

1. Information is Power — So Get It!Self-described "expert" lawyer-negotiators often
enter negotiations with arguments intended to persuade the other side
of the legitimacy of their positions. Unknowingly, they’re giving up
power from the first time they open their mouths. Negotiation power goes
to those who listen and learn. It’s thus critical to ask questions and
get as much relevant information as you can throughout the negotiation
process. With information in your pocket, you have power. Without it,
you ’ll be scrambling.

Effective lawyer-negotiators know this well. Instead of
trying to convince the other side of the strength of their case or why
the other side should agree to the merger, they start by getting information.
How? By building rapport, developing relationships, asking questions
(especially open-ended ones like what, how and why), finding out their
counterparts’ negotiation reputations, and probing their and the other
sides’ fundamental goals, needs, interests and options.

2. Maximize Your LeverageHow much does your client
want or need that deal or settlement, and how much does your client’s counterpart need it? What are your and
their client’s alternatives if an agreement is not reached? What can
you and your client do to strengthen your leverage?
What might your counterparts be doing? Finding the answers to these leverage
questions can be the
key to success. Ignoring them can be a recipe for failure.

Maximizing leverage can be especially challenging for litigators.
Why? They must, in effect, simultaneously send two seemingly inconsistent
signals.

On the one hand, they should convey to opposing counsel
that they are ready, willing and able to take the case all the way through
trial. After all, most litigators’ best alternative to settling the case — a
critical element of leverage — is trying it. And the higher the likelihood
of their winning at trial, the stronger their negotiation leverage.

Yet over 95 percent of litigation matters settle. So litigators
must also signal an interest in settling. But the more they signal an
interest in settling (and thus not trying their case), the weaker their
leverage.

So how can litigators credibly send both signals? Pursue
each on parallel tracks in the following way. On the litigation track,
always push forward to trial in an appropriately aggressive fashion.

On the settlement track, get the other side to initiate
the process (thus signaling their relatively strong interest in settling),
or suggest that it’s your policy in all your cases to discuss settlement
at that stage of the matter (signaling that you do it then in your strong
and weak cases, and avoid sending the "We’re interested in settling
because we have a weak case" message).

3. Employ "Fair" Objective CriteriaThe
quest for fairness and the perception of fairness are key elements in
many legal negotiations. Fairness, in most instances,
boils down to a matter of relatively objective standards,
like market value, precedent, efficiency or expert opinion. If both sides
can agree
on a fair and reasonable standard, many negotiations
will be successful. If not, it ’s far more difficult to reach agreement.

For transactional lawyers, standards can play an especially
crucial role. Why? Because many transactions involve parties with future
relationships, and standards can provide an independent and objective
view of the issues. This can depersonalize the negotiation and help preserve
their relationships.

"The reason my client’s purchase price and terms are
fair and reasonable," you might suggest, "is because they are
in line with the market and they are the equivalent of what it paid last
year for a similar company, factoring in inflation and the unique elements
of your client’s business." Or "it’s standard in the industry
for the losing party to pay attorneys’ fees if a future dispute goes
to arbitration."

Focus on standards. While applicable also for litigators
(critical standards include jury verdict research, expert opinions and
precedent), it can be an especially powerful move in many transactional
contexts. And it will give you credibility and help keep that "fair
and reasonable" hat on your head - a critical factor in many legal
negotiations.

4. Design an Offer-Concession StrategyNo one wants
to leave valuable items on the table gratuitously. The best way to avoid
this is to design the right offer-concession strategy.
Doing this will require you to understand the psychological
dynamics underlying concession behavior, as well as improve your ability
to evaluate
your counterpart’s "flinch" point. It’s not an exact science,
but you can learn to draw out and recognize certain
signals that will give you the edge in your negotiations.

A crucial offer-concession element in the legal arena involves
making sure your counterpart walks away feeling like they achieved a
good deal. How can you make sure of this?

Build in sufficient "room to move" with your
offers so your counterpart will feel like they received a decent result.
How often have you left a negotiation feeling you achieved a good deal
based on how far you were able to get the other side to move? "I
know we negotiated a great deal when we settled that lawsuit," you
might say, "because John increased his offer by $100,000 and we
only moved down $35,000." This is common.

So don’t just start at one point and refuse to move. Instead,
start more aggressively and make some significant moves. Provide them
with the ability to walk away feeling like they negotiated a decent result.

5 Control the AgendaEffectively managing the negotiation
process — overtly
or covertly — is one of the most challenging elements in striking the
perfect deal or settlement, even for the most expert
negotiators. Understanding when to use deadlines, how to effectively
operate within them, and the
psychological tendencies underlying them will give
you a leg up in your negotiations.

Controlling the agenda can make or break your negotiation.
Early in my career, I set up an appointment for an hour with a prospective
client and arrived promptly at our scheduled time. She kept me waiting
for 30 minutes, and then escorted me to a conference room where she told
me she was running late and that I had 15 minutes to explain what I could
provide to her and my fee. "Cut to the chase," she told me.

I did. And it was a mistake. I should have said "Wait
a second. Before we discuss my fee, why don’t you tell me what you want,
why and how you think we might be able to help each other? Then we can
discuss the value I add, which provides the basis for my fee. And if
we run out of time, I’ll be happy to come back or put together a written
proposal for you based on your needs, what we’ve discussed and include
my fee."

In short, control the agenda. And if your counterpart tries
to control the agenda, negotiate it. Not in an overly aggressive way.
But in a way that satisfies both parties’ interests.

* * *

Experienced lawyers often tell me they wish they had been
exposed to the strategic elements of the negotiation process earlier
in their careers. "Just think of the difference it could have made," they
say.

My response? "Experience does not equal expertise
in negotiations. It’s never too late to learn and improve." Remember
that before your next negotiation.

ABOUT THE AUTHORMarty Latz is president of Latz Negotiation Institute, a national
negotiation training and consulting firm based in Phoenix. His book, "Gain
the Edge! Negotiating to Get What You Want," can be ordered at GainTheEdge.com.
Latz can be reached at (480) 951-3222 or at Latz@NegotiationInstitute.com.